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By:

Kaustubh Kale

10 September 2024 at 6:07:15 pm

Silent Money Killer: Loss of Buying Power

In personal finance, we often worry about losing money in the stock market, dislike the volatility associated with equities or mutual funds, or feel anxious about missing out on a hot investment tip. Yet the biggest threat to our wealth is far quieter and far more dangerous: loss of buying power. It is the invisible erosion of your money caused by inflation - a force that operates every single day, without pause, without headlines, and often without being noticed until it is too late....

Silent Money Killer: Loss of Buying Power

In personal finance, we often worry about losing money in the stock market, dislike the volatility associated with equities or mutual funds, or feel anxious about missing out on a hot investment tip. Yet the biggest threat to our wealth is far quieter and far more dangerous: loss of buying power. It is the invisible erosion of your money caused by inflation - a force that operates every single day, without pause, without headlines, and often without being noticed until it is too late.
Inflation does not take away your capital visibly. It does not reduce the number in your bank account. Instead, it reduces what that number can buy. A Rs 100 note today buys far less than what it did ten years ago. This gradual and relentless decline is what truly destroys long-term financial security. The real damage happens when people invest in financial products that earn less than 10 per cent returns, especially over long periods. India’s long-term inflation averages around 6 to 7 per cent. When you add lifestyle inflation - the rising cost of healthcare, education, housing, travel, and personal aspirations - your effective inflation rate is often much higher. So, if you are earning 5 to 8 per cent on your money, you are not growing your wealth. You are moving backward. This is why low-yield products, despite feeling safe, often end up becoming wealth destroyers. Your money appears protected, but its strength - its ability to buy goods, services, experiences, and opportunities - is weakening year after year. Fixed-income products like bank fixed deposits and recurring deposits are essential, but only for short-term goals within the next three years. Beyond that period, the returns simply do not keep pace with inflation. A few products are a financial mess - they are locked in for the long term with poor liquidity and still give less than 8 per cent returns, which creates major problems in your financial goals journey. To genuinely grow wealth, your investments must consistently outperform inflation and achieve more than 10 per cent returns. For long-term financial goals - whether 5, 10, or 20 years away - only a few asset classes have historically achieved this: Direct stocks Equities represent ownership in businesses. As companies grow their revenues and profits, shareholders participate in that growth. Over long horizons, equities remain one of the most reliable inflation-beating asset classes. Equity and hybrid mutual funds These funds offer equity-debt-gold diversification, professional management, and disciplined investment structures that are essential for long-term compounding. Gold Gold has been a time-tested hedge against inflation and periods of economic uncertainty. Ultimately, financial planning is not about protecting your principal. It is about protecting and enhancing your purchasing power. That is what funds your child’s education, your child’s marriage, your retirement lifestyle, and your long-term dreams. Inflation does not announce its arrival. It works silently. The only defense is intelligent asset allocation and a long-term investment mindset. Your money is supposed to work for you. Make sure it continues to do so - not just in numbers, but in real value. (The author is a Chartered Accountant and CFA (USA). Financial Advisor.Views personal. He could be reached on 9833133605.)

Post H-1B Fee: Maharashtra’s IT Potential in Tier 2 & 3 Cities

The H-1B fee surge presents a unique opportunity for Maharashtra’s emerging IT hubs if backed by government incentives.

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The United States’ recent decision to impose a one-time fee of $100,000 on new H-1B visa petitions from 21 September 2025. This move marks more than a regulatory change—it signals a global reset in sourcing technology talent. For decades, Indian IT professionals have been the backbone of the U.S. tech industry, but with this steep cost increase, firms will now seek more affordable alternatives.


This shift is an opportunity India—and particularly Maharashtra—cannot afford to miss. While Tier 1 hubs remain strong, the real potential lies in Maharashtra’s Tier 2 and 3 cities.


New Opportunities for India

For U.S. firms—or companies serving American clients—the cost of hiring Indian engineers in the United States can be prohibitive, with visa expenses adding up to $100,000 per hire. Offshore delivery centres in India, offering a 70–80 per cent cost advantage, present a more viable alternative.


India’s established outsourcing ecosystem, large English-speaking talent pool, and global reputation for reliable service delivery give it a clear edge over other destinations. IT growth is no longer limited to Tier 1 hubs such as Bengaluru, Hyderabad, and Pune; Tier 2 cities are increasingly able to support expansion, backed by improving infrastructure and a steady pipeline of skilled professionals.


Potential of Tier 2 Cities

Nagpur

  • MIHAN SEZ (Multi-modal International Cargo Hub and Airport) hosts Infosys, TCS, and Tech Mahindra.

  • Centrally located, equidistant from Delhi, Mumbai, Hyderabad, and Kolkata—ideal for logistics and data centres.

  • 25+ engineering colleges produce over 15,000 graduates annually.


Nashik

  • Traditionally an agro-industry and manufacturing hub, now emerging as a startup and IT centre.

  • Office rents are 60% lower than in Pune/Mumbai, attracting GCCs (Global Capability Centres).

  • Growing number of startups in fintech, agritech, and AI.

  • 8,000–10,000 graduates emerge annually from local and nearby colleges.


Chhatrapati Sambhajinagar

  • Strong manufacturing base (auto, pharma, textiles) now expanding into IT.

  • AURIC Smart City offers plug-and-play IT infrastructure.

  • Government incentives include land, power, and tax concessions for IT firms.


Kolhapur

  • Traditionally agricultural and industrial, now moving into IT services and startups.

  • Large NRI community from the Gulf and Europe—potential for reverse investment.

  • A pleasant environment adds to its appeal.


Solapur

  • Known for textiles, now designated as a future IT cluster under Maharashtra’s 2023 IT Policy.

  • Low-cost land and government-backed incubation centres support growth.


To fully seize this opportunity, the Maharashtra government would need to roll out single-window clearance policies to attract companies—a step well within reach in today’s policy climate. This should be complemented by large-scale investment in IT parks across Tier 2 and Tier 3 hubs, along with incentives such as stamp duty and power tariff concessions. Offering tax holidays of five to seven years for companies setting up in IT clusters could further boost investor interest. At the same time, robust skill-development programmes to train thousands of youth annually, coupled with significant funding and support for research and development, would help build a sustainable ecosystem for long-term growth.


Startup & Innovation Ecosystem

Nashik and Nagpur have recorded a 300 per cent surge in startup registrations over the past five years. Entrepreneurs' focus has been on sectors such as FinTech, AI, EdTech, AgriTech, and EV solutions.


Government-backed incubators in Chhatrapati Sambhajinagar and Solapur are helping nurture this momentum by offering seed funding and mentoring support. By 2030, Maharashtra’s smaller cities could collectively be home to more than 2,000 startups.


Seizing the Opportunity

The H-1B fee hike has made offshore outsourcing the most cost-effective option for U.S. companies. While Tier 1 Indian cities will remain at the forefront, Maharashtra’s Tier 2 and 3 hubs present the real opportunity. To unlock this potential, the government must focus on:


  • Infrastructure – Reliable power, internet, IT parks, and co-working spaces.

  • Talent Development – University tie-ups for AI, cloud, and cybersecurity training.

  • Policy Execution – Faster rollout of IT policy incentives.

  • NRI Engagement – Structured channels for diaspora investments.

  • Branding – Position Nagpur, Nashik, and Chhatrapati Sambhajinagar as global IT destinations.


If executed well, Maharashtra could create 50,000–70,000 new IT jobs in smaller cities, driving significant economic gains and fostering more inclusive growth beyond Mumbai and Pune.

(The writer is a PHD in Human Resource Management based in Ahilya Nagar. Views personal.)

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